Question from Richard updated on 1st November 2011:
Our expert Mark Withers responded:
Having two seperate companies with two properties each does seem a bit cumbersome and administrative but the fact that the loss making ones are in the LTC and the profitable ones are in the QC is probably making the best of it. This alows you to retain profit in the QC and continue to reduce the debt and build the profitability. Whilst the profit is retained in the QC you can enjoy the low corporate tax rate of 28% which will be lower than your personal rate and lower than a trust. Focus your debt reduction on the QC to build it's profitability ahead of the LTC. Try to ensure you don't cross colateralise the two companies properties to ensure the banking is seperate for the two companies. The structure offers none of the asset protection you could gain with a trust in the mix but is none the less workable from a tax perspective given the low tax rate enjoyed by the QC.
Mark Withers and his team at Withers Tsang & Co specialise in advising on property related transactions, valuation and restructure services and tax planning.